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If the five major equity averages end 2021 with positive weekly charts, January 2022 should have a solid start.
The Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) have positive weekly charts. The S&P 500 Index (SPX) has a positive but overbought weekly chart. The Nasdaq Composite (IXIC) has a neutral weekly chart on a flat 12x3x3 weekly slow stochastic reading.
The Dow Jones Transport Average (DJT) and Russell 2000 Index (RUT) have neutral weekly charts due to declining 12x3x3 weekly slow stochastic readings. Strength through the end of 2021 could turn these charts to positive, which sets the stage for a positive stock market as January 2022 begins.
When I write my first story about the stock market in January the weekly charts for the major averages need to be positive at the end of 2021. In addition, I will have new value and risky levels, and pivots for each equity average and for every stock in the market.
The closes for December 31 will establish key levels from my proprietary analytics. I will show weekly levels for the first week of January, monthly levels for the month of January, quarterly levels for the first quarter of 2022, semiannual levels for the first half of 2022 and annual levels for all of 2022.
Traders and investors need guidelines to assess the risk and reward of the stock market and all stocks traded on the exchanges. I use daily and weekly charts and the levels from my analytics.
My daily chart shows price bars for each day going back one year. I include the 50-day and 200-day simple moving averages. A golden cross occurs when the 50-day SMA rises above the 200-day. A death cross occurs when the 50-day SMA falls below the 200-day SMA. I like to buy weakness to the 200-day SMA. Horizontal lines below the stock price are value levels from my analytics. Horizontal lines above the stock price are risky levels from my analytics.
My weekly chart shows price bars for each week going back five years. I include the five-week modified moving average and the 200-week simple moving average. The study along the bottom of the chart is the 12x3x3 weekly slow stochastic reading that scales 00.00 to 100.00. A reading above 80.00 is overbought. A reading below 20.00 is oversold. Rising between 20.00 and 80.00 is positive. Falling between 80.00 and 20.00 is negative. A reading below 10.00 indicates that the stock is “too cheap to ignore.” A reading above 90.00 indicates that the stock is in an “inflating parabolic bubble.”
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